Formula

Question 1

Return on Equity: What is the shareholder profit?

Answer 1

ROE=(Profit after taxes)/(Average shareholder equity)

Question 2

Return on Net Assets: How profitable is this company? / How efficient?

Answer 2

RONA =(Earnings before interest and taxes)/(Fixed assets+(current assets-current liabilities))

Question 3

Current ratio: Will the company have sufficient cash in the immediate future to meet its short-term liabilities?

Answer 3

CR =(Current assets)/(Current liabilities)

Question 4

Debt to Equity ratio: What is the mix of funds on the balance sheet?

Answer 4

DE=(Total debt (long term liabilities+current))/(Total equity(Issued capital+capital reservers+revenue reserves) )

Question 5

Debt to Assets ratio: What is the mix of funds on the balance sheet?

Answer 5

DA=(Total debt (long term liabilities+current))/(Total assets (fixed assets+current assets) )

Question 6

Price Earnings ratio: determining the value of a share

Answer 6

PE=(Share price)/(Earning per share)

Question 7

Earnings per share ratio: How much you ‘earn’ from owning a share

Answer 7

EPS=(Profit after tax)/(Number of shares)

Question 8

Net present value: Calculating today’s worth of a return on investment

Answer 8

NPV=Rt/(1+i)^t

Question 9

Weight Average Cost of Capital (WACC): A calculation of a firm’s cost of capital in which each category of capital is proportionately weighted

Answer 9

(Debt / debt + equity) x cost of debt + (Equity/ debt + equity) x cost of equity